Debenhams ‘considering’ £150m Ashley loan offer
Written by Hannah McGrath
Debenhams is “carefully” considering a £150 million loan offer from Sports Direct in a deal that would install Mike Ashley as chief executive of the struggling department store chain.
Last night Ashley’s company Sports Direct offered the retailer a financial lifeline in exchange for appointing him chief executive and director by the end of the month, in the latest stage of the retail tycoon's bid to seize control of the High Street retailer.
Sports Direct is also demanding that it be issued with five per cent of new shares in Debenhams as part of the deal.
In a separate move, Sports Direct, which is 61 per cent owned by Ashley, has also written to the Financial Conduct Authority (FCA) accusing Debehams, in which it holds a 30 per cent stake, of misleading investors in when it issued a positive market update weeks before a profit warning was announced.
In its letter, Sports Direct described the move as “at best impossibly optimistic or at worst deliberately misleading.”
Debenhams has said the allegation lodged with the FCA was “unfounded and self-serving” and said the company is in the process of executing a “much needed restructuring” while its “biggest shareholder tries to undermine the process at every turn.”
Earlier this month he offered to step down as chief executive and director at Sports Direct in order to take on an executive role at Debenhams as he outlined plans to oust all but one of the board members.
It followed Ashley’s launch of a dramatic boardroom coup at the start of the year, resulting in the ousting of Ian Chesire as chairman and the removal of Sergio Bucher from the board, although the latter remained in his role of chief executive.
However, despite the mounting tensions over Ashley’s attempts to bail out Debenhams, the company said it was giving Ashley’s offer “careful consideration.”
Last week Debenhams was reported to be looking to arrange an additional £150m of loans with creditors.
Sports Direct said its £40m of its offer would refinance and already-secured loan, whole £110m would remain available for working capital.
A spokesman for Debenhams said: “Debenhams acknowledges Sports Direct’s statement issued at 6.30pm last night and confirms receipt of its proposal to provide a £150m, unsecured 12 month term loan to the company, subject to certain conditions.”
It said any loan from a third party would require the consent of all interested parties including RCG Lenders and Noteholders as well as amendments to existing financial facilities.
It added: “Nevertheless, the board will give careful consideration to the proposal and will engage with Sports Direct and other stakeholders regarding its feasibility in the interests of all parties.”